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November 19, 2018

Our risky obsession with 'value-added'

Finance Cabinet Secretary Henry Rotich arrives at Parliament to present the budget for the 2018/19 financial year, June 14, 2018. /JACK OWUOR
Finance Cabinet Secretary Henry Rotich arrives at Parliament to present the budget for the 2018/19 financial year, June 14, 2018. /JACK OWUOR

This week Deputy President William Ruto said at the Coast that he wanted the NCPB to start buying macadamia nuts to ‘eliminate the middleman’ and increase local processing before export. Export of raw macadamia has been illegal since 2015 but the Kenya nut industry does not have the financial muscle to buy the whole harvest. As a result, macadamia prices to the farmer have fallen and production has gone down.

Similarly Gatundu South MP is calling for a ban on the export of unprocessed coffee. But which Kenyan company can afford to buy the entire Kenyan coffee crop? Again this plan would just hurt the poor farmer if it was implemented.

There are calls for Kenya crude oil to be processed before export. But as Karen Kandie pointed out in yesterday’s Star, a modern oil refinery costs $16 billion (Sh1.6 trillion). Kenya can’t afford that investment so any petrol from the Mombasa refinery will cost more than the world price. And Kenya will lose money.

Let’s quit this obsession with ‘value added’. Let’s just concentrate on making money from exports.

Quote of the day: "We will never allow anyone, any organization, or any political party, at any time or in any form, to separate any part of Chinese territory from China."

Xi Jinping

The Chinese president was born on June 15, 1953

Read: Budget will hurt mwananchi with petty taxes, Opposition MPs say

Also read: M-Pesa charges, kerosene, mitumba go up in Big Four budget

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